Raising financially secure children is one of the best gifts we can offer our children. Parenting involves raising children to become adults who are independent and contribute to society. One way to achieve this is by taking steps to secure your child’s financial future. Every parent will think/dream of the day their children will leave the nest at some point. I and my husband have reminisced about what we will do when we become empty nesters even though it’s so far off. We love our children so much we can’t imagine them leaving home. However, they inevitably do and the instructional part of parenting is not concluded until our children become adults and can hold their own.
According to this study by the Centre for Research in Social Policy, Loughborough University, “Over six in ten single 20-34-year-olds without children now live with their parents – a total of 3.5 million people in the UK”. This is said to have increased during the pandemic. The main reason for this is financial, with the high cost of housing topping the problem list. It is more important now than ever to pay attention to securing our children’s financial future. Setting the right foundations for financial success is important and starts with the right mindsets.
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Invest in their identity and self esteem
One of the skills children need to learn is how to manage money. This will start with learning to spend less than they earn. Children and young people are likely to be more susceptible to peer pressure. We are often trying to impress other people when we keep up with the joneses”. The root cause of the “impressing other people” syndrome is low self-esteem or a deep-seated need for acceptance.
We all need acceptance. We are social beings and want to love and feel loved. The problem comes when we start to feed off or highly depend on validation and acceptance from other people. It is important to invest in ensuring that your children have a good sense of identity and healthy self-esteem to prevent this.
Raising financially secure children who are confident with healthy self-esteem requires providing a safe and secure environment where they feel loved and accepted. Reminding them they are loved, encouraging them, helping them understand that failure is inevitable and a part of learning is necessary. One of my main challenges as a parent is how to ensure my children don’t end up entitled with a bloated ego. I find the trick is to teach them to care for/about other people. For instance, the difference between assertiveness and aggressiveness or confidence and pride always lies with whether you are making something about yourself.
Place a high emphasis on values and principle
One of the ways to raise children with a sense of identity is by teaching them to live principled-based lives. Good financial values are important because they ensure that your children grow up understanding what is required to make money in healthy and legal ways, how to keep it, and how to use it to benefit society. My money philosophy is that money is not the end but the means to an end. The end goal is living a fulfilling and purpose-led life.
One of my best go-to books for principled-based success is the 7 Habits of Highly Successful People by Stephen Covey. I wrote a review of it here, if you haven’t read this book, you need to do so. Raising children based on a good set of values and teaching them the right definition of success is important. Living below your means, living debt-free, contentment are all good values to instil in your children.
Also, teaching your child/children to live by principles and not based on approval from others is important. Anyone with a toddler starting to talk will know that “why” is one of the most frequently used toddler words. I found this to be a very amazing phase with my children even though it was overwhelming at times responding to the torrents of questions. I believe curiosity and establishing the purpose of something is great for making and managing money well. I teach my children to understand the purpose of everything.
This will mean they will challenge you at times. I remember having a conversation about advocation with my son. A few incidences later we had to have further conversation about how to do so respectfully as well as when it is appropriate and when it is not. The important thing is that they can stand out in a crowd with their heads held high and possess the ability to make decisions backed with logic and wisdom.
Teach them the value of hard work
One of the values we teach our children is to always bring their best to the table. This means putting sufficient work into anything they have been asked to do and going above and beyond as much as possible. Hard work is one of our family’s core values. Hard work is not just how much time and energy is put into something but also the creativity in managing time and resources in bringing the best work. Obviously, physically hard work alone doesn’t guarantee wealth so we discourage both physical and mental laziness.
Teach your children how to work smarter and not just harder. I believe that developing both physical agility and mental agility is important and complements each other. This is not the same as expecting your child to fulfil some idea or fantasy of what you want them to be. They should be encouraged in their giftings but be willing to try even when they are confronted with new things out of their comfort zone.
You can help them improve by encouraging and praising their effort to work hard and smart. A lot of child psychologists recommend focusing on efforts and achievement when issuing praise. You know your children’s strengths and weaknesses best. When a child is gifted in an area and produce mediocre work, encourage them to do more.
Notice when they take initiative. I am overjoyed when my children do something without being asked so I make it a point to notice. I also pay attention when they show the values that we are trying to instil. Why is this important to financial success? Hard work will be important for them to make an income and grow wealth. Hard work takes discipline which is one of the important habits of successful people. Hard work ensures the transition from financially secure children to financially secure adults.
Teach them about money in healthy ways
This means there are unhealthy ways to teach your children about money. Limiting beliefs about money can be as damaging as not teaching them good money habits. For example, as a financial educator, I talk about money all the time and my children pick up on it. This is a good thing but I decided to dial the money talk back a bit when they are around as they don’t often understand when I am in coaching/analysis mode.
Recently, I discovered that my son now has this ‘money speak ‘. I heard him tell his sister a few times they can’t have something because it’s too expensive. So I gave him a talk to say if they need something all they have to do is ask and provide justification for it. If something is highly beneficial we will do our best to prioritise it in our budget. In most cases, our principles and values would not support high purchases without justification so this is not a blank cheque at all.
I also told him our decisions are not purely financial. We might have non-financial reasons why we spend a bit more on certain things. For instance, eating healthy is more important than eating cheap. However, both (healthy and cheap) can be achieved if one is creative.
Delayed gratification, contentment, and generosity are all great ways to ensure kids manage finances well. However, helping them feel deserving of wealth is also important (this shouldn’t be an issue if they have healthy self-esteem). Think about the messages being passed on to your kids by the things you say and your attitude to money. It might be beneficial to take stock of your general behaviours and how healthy this is for you and consequently your children.
One of the ways to ensure you are teaching them about money in healthy ways is to promote an abundance mindset over a scarcity mindset. A high focus on money or the lack thereof can generate negative attitudes to money. The key is to ensure that whatever we are teaching about money doesn’t produce negative emotions both in the short and long term. Negative emotions like greed, worry, anxiety, and fear can all lead to bad money management.
Be financially responsible- Lead by example
Financially secure adults are financially secure children with the right foundation and leadership. The best way to teach children is by doing. Carl Yung, the famous Swiss psychiatrist said children are educated by what the grown-up is and not by his talk. Model good financial management by practising sound financial principles. Include them in decision-making when they are old enough. Embrace the teaching moments when they ask ‘why and use it wisely. Don’t send mixed messages by saying one thing and doing another. Chances are, if you are financially stable, your children will grow up the same.
Conclusion
There are other practical ways to raise financially secure children but these 5 points will ensure that they have the ability and character to manage their finances well regardless of what life throws at them. Leaving them an inheritance does not guarantee they will be financially secure, ensuring that have the right physical, emotional, and mental capability to manage money well is equally important.
Which of the 5 points resonated with you? Let me know in the comment below. Also, remember to share and pin. Have a valuable week!